Archive for the 'Marxism' Category


Barry recently published a reminiscence about his 1971 trip to China that I very much enjoyed reading.

Nevertheless the following paragraph struck me as just the sort of thinking that people used to get away with in the sheltered land of communist youth groups and perhaps such thinking is still lingering with Barry.

‘3. Who needs a Navy? I’ll never forget meeting with party cadres and discussing the military threats to China from the Soviet social-imperialists (the Ussuri River border being a dangerous hot spot where fighting had broken out in 1969) and from the US imperialists in Indo-China and the Pacific. We were told that China’s military strategy was entirely defensive and based on the Peoples Liberation Army and civil defense. My ears pricked up when mention was made of a coastal naval defense force. I asked, “Why doesn’t China have a conventional Navy – why just a small coastal guard?” The reply, which I’ll never forget, was that “China does not need a Navy because we have no intention of expanding our interests beyond China. We shall never become imperialist! Only imperialists need a large powerful Navy!”’

So now that China has a vast blue water navy and is so obviously a blatantly vicious imperialism Barry recalls the statement and it becomes a sort of ‘ah ha’ moment for him about what the attitude of revolutionary China was in comparison! But it’s clearly not so simple. (I may have misunderstood where Barry was going with this thinking, but it’s worth teasing out…especially given how we fell out so completely over Putin turning up in Syria and what it would mean to the democratic revolution! Having got it completely wrong Barry has never managed to backtrack through the issue, so I’m not hopeful.)

But that statement from the Chinese side was silly at face value. That is to say even at the time it was made it was silly! People that didn’t spot or face up to this type of statement as just a foolish ‘propaganda’ style explanation all those years back might want to think again now. If you can’t spot either the self serving duplicity or actual naivety involved then you might be vulnerable to similar thinking. That’s one thing for a young person but I’d have to question the worth of the wisdom growing years in between if such a view is persisted with now.

So am I building a straw man? I hope so in the narrow sense; but in the broader sense definitely not. The style of thinking involved here is spread right through the progressive element that I have known over the decades. These are people who are not outright pseudoleftists, but are drifting, or have long ago drifted to the methods of the cancel culture and who now – with perhaps the excuse of ‘good’ manners regularly operate on silence when they know full well they ought to speak up. They live a pretence that they as individuals are scientifically minded and open to debate when they are nothing like involved in the search for understanding. They long ago stopped operating in the manner Mao advocated in combat liberalism so that ‘open honest and above board’ is just an old slogan they might remember, but it has no effect, no substance in their current world.

After Putin signed up to some comforting words about democracy and elections in Syria half theorists – who were people that used to regularly post or comment at Strangetimes – totally abandoned the Strangetimes project. In never walking this issue back they demonstrated that they most certainly are vulnerable to a delusionary drift.

Lately we have had the anti Erdogan claptrap from Tom G and silence from all the others who know full well that it is claptrap! Or they ought to! Who can tell with the silence! If based on any draining of the swamp theory then Tom G’s view has no connection to a democratic revolutionary’s standpoint but who can tell with such people. Silence. Cancel culture. Talk to themselves. Drift…

This Chinese blather from 50 years ago is not the sort of thinking that could sink the Bismarck and of course the Bismarck had to be sunk! I don’t think you would get the leftist child of a WW2 sailor making such a comment! But then who would think that someone from Malta could accept such twaddle either. Yet…

Chinese ‘red’ blather was never the sort of thinking that could have occurred to the American revolutionaries like Jefferson. He immediately built a blue water navy to deal with the Barbary pirates. From the very beginning of that revolutionary country the navy was integral to its survival as a beacon for revolution.

Whatever line was being pushed in 1970, in reality Mao would not have accepted such blather any more than Zhou En Lai. (Both had lived through WW2 and both had watched Battleship Potemkin.) China was too poor to build a big blue water navy at the time so it just didn’t matter! China did however build an atom bomb; and they built their bomb despite the Mao stand that atom bombs were in the final analysis ‘paper tigers’! Building of Atom bombs was something that the young communists of the time managed to rationalize and I for one would be keen to learn how those that did so argued about it.

Singers of the Internationale can’t forget seafarers! Shipping is the reality of globalists. The Internationale can’t be sung by anti shipping land-lubbers with ‘a coastal navy’ and make any sense.

In the past, even the suppression of slavery by the British navy would become someone else’s job with this type of no blue water navy thinking! On its face this is rubbish where Japan’s WW2 navy disappears in a puff. It’s ‘other people’s job to deal with that’ is the consequence of this style of thinking. Proletarians have a world to win and we crew big ships that we build and fill and consume the contents of. We are not the slightest bit interested in ‘food miles’ nor with small is beautiful thinking.

Simply speaking the democratic revolution does not go global from the start so revolutionaries do have naval issues to consider! The communist revolution is not yet in sight.

Despite appearances created by the current victories of revisionists, genuine communists are the cutting edge of the democratic revolution, and we are very interested in the navy. In 2020 when there are still no revolutionary countries in some kind of socialist camp to bother us, piracy still creates a stupid thought pattern among pseudoleftists.

Workers crew ships full of cargo, yet are supposed to be left to fend for themselves while these so-called ‘lefties’ condemn the big ships and the multi-national transport conglomerates as well! The greenies even try to stop the coal and other fossil fuels being shipped to save the planet no less. Just consider the green scaremongering when a bulk carrier ran aground the other day! Totally pathetic scaremongering of a very minor mistake made by careless workers. The ship’s crew were responsible for the loss of that bulk carrier. The workers stuffed up!

Of course Barry gets the stupidity of a stand that leaves seafarers at the mercy of pirates, but he might be a bit weak on just how you deal with pirates! I don’t know. I do know the ½ theorists are totally weak on Turkey and the PKK issue. The Mediterranean and MENA issue have just drifted away over these 5 years!

This type of soft thinking from 50 years ago jumps up to bite almost everyone with a leftist disposition when it comes to people sloshing around the world as refugees. The vexed issue of refugees brings on more silence. Not just people being bombed into sloshing around by the current crop of fascists led by the audacious Putin either.

We know there are 3.6 million of these people sheltering under Erdogan’s protection in Turkey and as many more protected by the Turkish army in Syrian enclaves! I suppose 3-400,000 Syrians made it to the safety of the west! The lucky ones who are enjoying the good life! But Putin’s policy was to continue the Assad policy of creating refugees. They had policies of attacking hospitals and making lots more refugees; so what is to be done? Put in troops to resist him and shoot down his aircraft if they come near that is what a modern mechanized army can do. That is what the Turks are positioned to do. That is how the world must deal with Putin’s refugee making policies. That is how Erdogan is dealing with the issue.

The other far more humble entrepreneurial type people smugglers who just know what they want and have the get up and go to go and get it are also audacious in their own way. But are they the solution to the peoples problems? NO and that is obviously so.

Open the borders, let the people of the world roam free is the -quite frankly- dishonest or dim witted easy answer that neither Zhou En Lai nor Mao were themselves prepared to countenance in their day. These real revolutionary leaders faced up to their responsibilities of leading almost ¼ of humanity. They never took charge of China just to issue such a declaration of ‘freedom’. They did exactly the opposite. What is more everybody knows they did and so everybody can see the giant double standard that ½ theorists carry. Stay at your post was the order in China. Do not flood the cities but urbanization was required and proceeded in a measured kind of way. Mao did not betray the peasants or just use them and move on. The historical tasks were not avoided by policies of silence either. China had to be functioning as well as changing as rapidly as possible. What was possible was always at issue but make yourself useful was never in doubt! So those seeking the easy life are simply not first priority when the real problem is millions in poverty.

Being bombed by the fascists to the point where there is for them no alternative but to run to save their lives is one thing. Having for example made it to Turkey ought Turkey shuffle them on to Sweden? Ought all the doctors go to live in Paris? How about all the engineers? Will the emptying countries be left with the old and no one to care for them as parts of many countries actually develop right now?

So to recap. September 2015 was when the Russians turned up with aircraft in Syria! The now silent Australian communists post no current content on what is now several years of important developments in the MENA region. Indeed some comments from as little as a couple of years ago were nothing more than a doubling down on the previous foolishness! We are now about to enter the sixth year after the intervention and Arthur retained his thinking from the last months of 2015 that reality had shattered with Russian barrel bombs in the first 6 months. Since then not much for me to even bother to reply to. I poke a stick at them every now and then, but the corpse doesn’t stir!

Silence from reds is nothing less than a disgrace! If people are to contribute to the world wide people’s revolution that all manner of progressive people and the all important industrial proletariat is interested in, it does matter what ‘we’ theorists think even if revolutionary minded people currently control almost nothing at all.

Big problems requiring revolutionary solutions are in the here and now! No involvement in the political struggle, no involvement in the economic struggle and no involvement in the theoretical struggle is just no involvement at all!

Revolutionary states will maintain blue water naval forces long into the future!

Let 100 Flowers Blossom and 100 Schools of Thought Contend.

Water lilies

From Lastsuperpower by Arthur 2006

Hi Rosa, I just read right through your 14,200 word summary and was struck by the following among the caveats at the end:
“…it is fundamental to my project that if I cannot explain myself in ordinary language, then not even I understand what I am attempting to say!** **And that is why this Essay will need to be re-written many, many times.”

I admire the enthusiasm with which you are tackling the problem of why allegedly marxist tendencies have been overwhelmingly unsuccessful and have degenerated into peurile sects adequately ridiculed in Monty Python’s “Life of Brian”. But I would say they have as little grasp of dialectical materialism as they do of anything else. A classic illustration can be found in another thread here re Spelling out the Drain the Swamps theory – where a dalek challenged to concretely analyse concrete conditions is reduced to simply frothing at the mouth together with the following complete “dialectical” argument for not trying to change the status quo.

“My answer to all your stuff is that the internal contradictions in any entity will be worked out by the usual dialectical processes. The nature of what is to be born from the internal struggle will be determined by the resolution of the internal contradictions. No amount of outside pressure nor outside influence will have any effect on that which is to emerge.”

Since we are at least in agreement about the complete uselessness of the “philosophy” of the various peurile sects it might be useful to engage in dialogue. But you would need to tackle the concrete issues we are discussing (eg Iraq) in ordinary language. From passing references scattered throughout your material it appears that you share much the same political views as the “dialecticians” you reject as fraudulent. That ought to give you pause for thought.

We hold opposite views on concrete political issues so discussing those concrete issues ought to be more productive. If you read the thread linked above from the beginning, and the links within it, you will find plenty of material that shows the connection between our different political views to yours and our different philosophical views concerning dialectical materialism to yours. Your account of the Background to this project is much easier to follow than your summary. I was struck by your remark:

“…if truth be told, some {Stalinist Dialecticians} (Russian or Chinese) display a far more nuanced and sophisticated understanding of “the dialectic” than do many {Orthodox Trotskyists} – Ilyenkov and Oizerman come to mind here. Another: Alexander Spirkin’s analysis of the Part/Whole relation, here.”

I can at least agree with you there. Ilyenkov is worth reading. (BTW please fix the broken link to Spirkin.)

Frankly I don’t have time at the moment to read much more of your 600,000+ words work. But I will quote this, as an explicit welcome to a site that DOES want to be contradicted:

“Nevertheless, for all their avowed love of “contradictions”, DM-theorists do not like to be contradicted – especially “internally”, as it were, by a comrade. In fact, they reject all attempts at doing this (which is rather odd given their commitment to the belief that progress can only occur this way). So here is a nice conundrum: if all progress and change does indeed result from “internal contradictions, then the pages that follow, which uncover the many that lie at the heart of dialectics, should be warmly welcomed by the DM-faithful. Indeed, if improvement and development can come about in no other way, then these pages ought to be well-received by those committed to “dialectical” change. That they won’t be well-received should therefore count as one of the opening “contradictions” exposed at this site: DM stands refuted as much by its own unwillingness to be contradicted (internally or externally) as it is by the fact that this situation is not likely to change.”

Our experience is that they simply don’t want to argue with us. Occasionally, like the dalek, one of them turns up and expresses his indignation without any attempt to understand what we are actually saying or to directly respond to any replies – the minimum courtesy required for argument. Given your background, you will find much to contradict here. Please go right ahead! But please, avoid the language you use in bantering with your fellow sectarians and just argue with us about how to analyse and change the world in ordinary language that anyone can understand.

Dusting off the Archives

There have been some recent additions of interest in the Australian section of the Encyclopedia of Anti-Revisionism On-Line.

The material was written by members of the Red Eureka Movement a Marxist-Leninist group from the late 1970s and early 1980s.

The entire encyclopedia deserves lengthy visits by anyone trying to make sense of the 20th century communist movement. This would include anyone planning to be part of some future 21st century communist movement.

The REM material is arguably the best place to start. It is generally more readable and insightful. This leaflet is good appetizer

The material represents a rebellion against nonsense that had become entrenched because of groupthink, lack of discussion, blind acceptance of decisions from the top with minimum of thought and the demonizing of opponents.

The REM material includes some important articles on foreign policy and also a range of articles critiquing the ‘left’s’ economic illiteracy.

While you are checking out the Encyclopedia don’t forget to go here to see what what Mao and the Chinese Communist Party were saying during the 1960s and 70s about the Soviet Union and the threat of capitalist restoration under socialism.

Capital volume 2 by Karl Marx

I’m in the process of reading some of the papers from The circulation of capital: essays on volume two of Marx’s ‘Capital’ (1998). A number of the papers point to the relevance of Marx’s Volume 2 to the current structures and ways in which modern capitalism is analysed. Other of the papers are helpful in explaining the dialectical method used by Marx in his analysis with the clear implication that that method is still essential today to analyse capitalism. So, I offer below an extract from the General Introduction as a preliminary guide to accessing this book.

My argument has been and remains that we need good guides to Marx. The reasons for this are becoming clearer:
– some modern authors build a bridge between the capitalism of Marx’s day and modern capitalism
– much of Marx’s work was published after his death and it needs editing and interpretation simply because it was rough drafts
– various translations from the original German are significantly different and some of the modern authors go to a great deal of trouble in sorting out those issues by comparing translations or going back to the original German
– Marx often wrote things in certain ways without explaining clearly why he was doing this. He didn’t like to point out where his argument was heading because that would prejudice the rigour of his analysis. This makes him harder to understand to us spoilt moderns who are used to being hand held along the way.
– Marx is deep and hard to understand anyway, so we need all the help we can get!

Marx’s Capital II, The Circulation of Capital: General Introduction
Christopher J. Arthur and Geert Reuten


Marx’s Capital Book II, ‘The Circulation Process of Capital’, is divided into three main parts. In Part One, Marx considers the metamorphoses capital undergoes in its circuit, namely as money capital, production capital and commodity capital. Of course, in normal conditions, this sequence is expanded into a regular imbricated set of sequences such that at any given time a different component of the total capital is present in each form.

In Part Two, Marx examines the circuit as a turnover. He shows how various components of capital (for example, so-called ‘fixed’ and ‘circulating’ complete their circuit at different rates; he argues that the influence of the circuit’s periodicity, and the varying ratios of such components, must affect the annual rate of surplus value. In both these parts capital as such is treated; but it is not considered as a system of capitals; however, the reproduction of any given capital is necessarily bound up with the reproduction and circulation of the total social capital.

Thus in Part Three, when Marx considers reproduction, he examines the revolution of this totality which necessarily includes not only the intertwining of each individual capital circuit with others but the whole circulation of commodities, those commodities bought by the workers to maintain themselves as well as those means of production capitals sell to each other. On this basis Marx distinguishes two ‘departments’ of production: those producing means of production and those producing means of consumption. This very division, as well as the analysis of the relations between these departments, is one of the enduring achievements of Marx’s work.

The relatively ‘technical’ character of much of Book II misled Engels, for one, into thinking that the argument concerns only relations between capitals; this is a grave mistake, for class relations are integral to capital and thus the matters dealt with here stand in intimate connection with its class basis; for example, capital’s concern with shortening turnover time has consequences for the intensity of labour, and the very choice of criterion for discriminating departments is rooted in the necessary reproduction of class relations (as Mattick points out in Chapter 2).

Even if this Book II study is still one at a relatively abstract level, the phenomenal expressions of the abstract categories developed may be visible to the extent that the concrete is a simple expression of the abstract categories – but not if in this process of concretion the system inverts its fundamental logic in its appearances (for example, in interest or ‘productivity of capital’) or reverses its dynamic (for example, in the case of tendencies and countertendencies). Tony Smith, in Chapter 4, shows how many of the categories developed in Marx’s Book II indeed find phenomenal expression; hence he can show how much of the Book II analysis can help us in understanding current developments in capitalism such as ‘flexible production’ …


We turn now to outlining the sequence of essays in this volume. We begin with two papers that pertain to Capital II as a whole. Paul Mattick shows how Book II fits into the overall structure of Capital. He argues that, just as the social form of commodity exchange that formed the starting point of the analysis in Book I was unmasked as the social form of an exploitative class relation obscured from view by market relations, so in Book II Marx considers how that form is structured in terms of the circulation of capital. The circulation of capital as a totality among economic categories gives rise to the idea of ‘the economy’ as an autonomous system of forces rather than a feature of a particular form of social life with a particular class structure. Marx’s analysis of reproduction in terms of the two departments, Mattick indicates, shows how the categories of the market lose their explanatory independence. In this context he shows the underconsumptionist explanation of economic crisis to be an untenable interpretation: effective demand is determined by capital accumulation. The schemes of reproduction then highlight the conditions for the possibility of economic crisis, along with the existence of capital as a class relation, rather than the issue of maldistribution of income or of disproportionality ­between departments of production.

In the following paper, Patrick Murray indicates that the purpose of Capital’s middle volume is to deepen the analysis of the double character of the commodity (use value and exchange value) of Book I and to show that what circulates in a capitalist economy is capital. In stressing that commodities in capitalism are use values which have the specific social form of capital, Murray convincingly takes distance from the view, held by Sweezy for example, that use value is irrelevant to Marx’s analysis. In this perspective his main focus is to debunk the ‘commerce and industry’ picture of the economy in capitalist society. This picture breaks down capital’s circulation into a generalized circulation of wealth whose basic forms are money and commodities, buying and selling (‘commerce’), accompanying a production process which, devoid of any determining social forces simply transforms material inputs to create new wealth (‘industry’­). Murray points out that, oddly, this pictures leaves out capital itself. In criticising it he shows how the categories of the commerce and industry picture prove conceptually too ‘thin’ to grasp the circulation of capital; likewise ‘thicker’ co-involvements of use value and value must be acknowledged in order to comprehend capital, its turnover and reproduction, productive and unproductive labour, and fixed and circulating capital. For example the phenomenon of the material reshaping of circulatory functions (see Smith, Chapter 4 on ‘lean production’ delivery systems) would be unintelligible on the basis of the ‘commerce and industry’ picture. In an appendix, Murray shows that Ernest Mandel erred in claiming that Marx came to the conclusion that labour in ‘service industries’ cannot be productive because it is not ‘concrete’ and does not result in a free-standing product.

The next paper, by Tony Smith, directly relates Part Two of Book II of Capital to recent trends in contemporary capitalism and its apologetic. Marx here derives a drive to lower circulation time and circulation costs. Analysing the move towards so-called ‘lean production’ in the perspective of Marx’s thesis, Smith concludes that this development corroborates the theory. Next he moves on to considering lean production from another perspective of the Book II analysis. Marx argues that in the circulation process capital accumulation is the independent variable and consumer activity a dependent variable. The defenders of lean production insist that, while this indeed holds true for the era prior to ‘lean production’, the reverse now obtains: information technologies allow manufacturers to trace changes in consumer desires accurately; and flexible production techniques allow firms to shift production rapidly in response to new consumer demands. So, they claim, true consumer sovereignty is now being instituted for the first time; the consumer is the sun around which the lean production system turns. If this claim is warranted, Smith allows, the Marxian perspective in this respect is refuted. However, building on Marx’s account in Book II of the place of consumer activity in the circulation process of capital, he argues that overcoming conflicts in the relation of capital to consumers requires a thoroughgoing social transformation far beyond the possibilities of ‘lean production’.

In his own paper, Chris Arthur calls attention to the significance of the introduction of the concept of ‘circuits of capital’. He examines Marx’s theory of the circuits of capital outlined in Part One (chs 1-4) of Book II. He traces the form of the circuit and shows how it may be viewed as the imbrication of three circuits. On this basis he argues that capital cannot be understood as a fixed form but only as the totality of functional forms through which it passes in its circuit; that is, capital exists as the identity-in-difference of all its functional forms, an identity established and maintained only in its movement through them. Such a view of the three circuits Marx distinguished he illuminates by outlining its background in Marx’s knowledge of Hegel’s Logic, and especially therein his theory of the syllogism which examines successively its mediation in the universal, the particular, and the individual judgments. In addition Arthur addresses a surprising feature of the recently published 1865 manuscript of Book II, namely the appearance in it of four circuits, not three.

Martha Campbell’s essay examines Marx’s explanation of the functions money must perform in the circulation of capital. In the first part of the paper she provides an important outline of the methodological frame of Marx’s monetary theory of Book II, explaining why Marx adopts particular assumptions for his analysis (an analysis that runs in fact throughout Book II). From his analysis of turnover Marx concludes that capital must occupy all three of its forms simultaneously; although the money form is no less transient than the others, Marx demonstrates that money hoards are required by the needs of circulation, and this is the foundation of his explanation of the credit system. Capitalists transform their hoards into interest-bearing capital in order to gain an additional share of the social surplus value. As a result money capital is concentrated in banks and in the bond and stock markets. Campbell argues that, by analysing capitalist reproduction apart from the credit system, Marx shows that the possibilities for its disruption are not limited to the problems resulting from debt and the conditions of credit. In proposing that the credit system develops so that capital in its money form will bring in surplus value, Marx is rejecting the claim that it develops to solve the problem of the shortage or high cost of gold money. Campbell concludes that the credit system complicates rather than simplifies capitalist reproduction and renders it more precarious.

In Chapter 7, Fred Moseley examines Marx’s reproduction schemes of Part Three of Capital II against the background of correspondence between Marx and Engels and the Theories of Surplus Value. He argues that the initial purpose of Marx’s reproduction schemes was to refute Adam Smith’s view that the price of the total commodity product of society is entirely resolved into wages plus profit plus rent; that is, entirely resolved into revenue with no component left to replace the constant capital consumed in production; he notes that Quesnay’s Tableau Economique could have helped Marx in so doing. Important to this refutation, Moseley indicates, is the distinction between money which functions as revenue and money which functions as capital. Emphasizing that Marx extensively criticised classical economics’ conception of capital as merely physical means of production, common to all types of economic systems, Moseley in the course of his paper contests Sraffian, or generally neo-Ricardian, interpretations of Marx which read his analysis in physical terms.

Finally Geert Reuten’s paper examines the same Part Three from the perspective of Marx’s method: is it akin to a modelling approach as we find it in modern orthodox economics, or does it rather fit into a systematic-dialectics methodology? More so than any other part of Marx’s work, his theory of reproduction influenced orthodox economics: it laid important foundations for its later macroeconomics and theory of the business cycle. Why particularly this text? In answering these questions the major part of Reuten’s paper is devoted to an examination of the systematic character of the exposition of Marx’s reproduction theory, focusing on its procedure in laying out assumptions. Reuten concludes that, while the text may not be incompatible with a systematic-dialectical methodology, it is certainly defective in that respect; rather the textual evidence favours the view that Marx, in this part, takes a particular modelling approach.

The papers brought together here show differences in historiographic and analytical emphasis and this makes them complementary studies. Certainly many questions concerning Marx’s Book II of Capital remain unanswered, an obvious example being why dialectics can be so prominent in Part One (Arthur) while trifling in Part Three (Reuten). All the authors agree that this work is crucial in understanding the trilogy of Capital and its method. Without this middle book we cannot grasp the juxtaposition of the analysis in the other two.

Marx on Money by Suzanne De Brunhoff

Marx on Money by Suzanne De Brunhoff 1973 French, 1976 English

“The principle difficulty in the analysis of money is surmounted as soon as it is understood that the commodity is the origin of money” (Marx, Critique Ch 2)

Marx initially provides us (Critique, Ch 2; Vol 1, Ch 3) with an abstract study of the functions and properties of money, which he initially assumes is gold, “for the sake of simplicity” (Vol 1, Ch. 3)

There is no talk in this section of greedy, selfish, power seeking capitalists but only some passing references to how money can make fools of all of us. He is explaining money, not condemning it. He pursues this approach rigorously but without explaining why he approaches money in this way.

The strength of Suzanne De Brunhoff’s book is that she fills this gap. She explains that Marx is outlining a General Theory of Money and a Complete Theory of Money and the reasons why. My introduction to De Brunhoff here can’t be a substitute for reading her or even less a substitute for reading Marx. But I think her work is valuable because she provides some extra connective tissue to the body of Marx’s work, some overall perspectives that he didn’t provide.

Some essential background: the commodity

Both Marx (1818-1883) and his predecessor Ricardo (1772-1823) saw value as originating in labour. One difference between them is that Ricardo just accepted that as the way things were, whereas Marx saw value as a perverse social relation which would have to be overthrown.

Marx chose the commodity as the starting point of his critical study of capitalism and political economy. A commodity is different from a product in that it is both a use value and an exchange value. A product is just a useful thing whereas a commodity is produced for the purpose of being exchanged in the market place. Use values as products of labour are always useful no matter what the social system. Value, on the other hand, is a social category which arises from the exchange process.

You can imagine societies both past and future where there is no exchange of products and hence there would be no value category. eg. there would be no value in a hunter gatherer society where individuals or families provide mainly for themselves and there is limited exchange of products occurring. You can also imagine a future communist society where people just take the things they need from a commons, there is enough for everybody. There would be no exchange and no value category. “From each according to their ability, to each according to their wants”. Of course, such a society could not be arrived at immediately and the transition process is far from clear. But it can be imagined.

The Origin of Money is the Commodity

How does Marx’s commodity starting point relate to our understanding of money? What follows from the analysis of the commodity as a unity of use value and exchange value is that money originates in commodity value. Value is an abstraction that has to appear (reference Patrick Murray).Exchange value is the form of appearance of commodity value (reference Marx, The Value Form). Money crystallises value in a physical sense. Gold becomes money. The social relation of value (social because commodity exchange is a social process) ends up taking on a physical form. Since the exchange of commodities involves an equivalence relationship Marx describes money as the perfected form of the general equivalent.

Other economists don’t see money as originating from the commodity. A common view is that money is a convenient symbol to facilitate exchange, since barter is too inefficient. The quantity theory of money takes the view that the value, properties and quantity of money all originate from money itself and not from the commodity.

De Brunhoff argues that some “marxist’ economists make such errors as well as bourgeois economists. For example, Hilferding overestimated the importance of finance capital because he did not have a clear grasp of the fundamental functions of money (xiv)

If you don’t understand the origins of money in the value form of the commodity and even if you understand that value originates in labour, as a quantity, then you will lose your bearings completely when capitalists create different forms of money such as banking money. Money, as “the perfected form of the general equivalent” may cease to be metal but it can’t escape its origins in the commodity, which is a unity of use value and exchange value. Moneys’ essential functions (measure of value, medium of circulation, money – object of demand) can be traced back to the use value / exchange value contradictory nature of the commodity or evolve out of it. Those essential functions of money never go away even though capitalists create forms of money, such as credit, which attempt to negate those functions.

A “General Theory” of Money

Is money just part of the machinery of capitalism or does it have a broader necessity? The way in which the capitalist uses money, to employ wage labour and buy means of production, and the way in which the average worker uses money, mainly to buy necessities, suggest that some of its functionality is bound closely to the inner workings of capitalism whilst other of its functionality is more benign and may be useful in a post capitalist society.

By contrast, utopian schemes such as The Zeitgeist Movement and The Venus Project aim to overthrow “the system” by popular acclaim, abolish money and replace the market with computer surveys of peoples needs. Such movements by pass the need for a real analysis of the diverse functions of money.

De Brunhoff argues for the necessity of a general theory of money as distinct from a specifically capitalist theory of money. Sorting out the monetary problem consists

“… in knowing the meaning of this strange existence of money, inseparable but distinct from the other relations characteristic of capitalism … Hence a theory of money applicable to the capitalist system must be subsumed under a theory of money in general, valid for every monetary economy; in other words a general theory of money … Thus Marx considers it necessary to begin with a study of money in its general aspect, independent of the capitalist form of production in order, among other things, to determine its role in the capitalist form of production” (p. 19)

So, what is this abstract society that uses money but is not capitalist?

Marx’s study is based on an idealised scenario of a simple commodity economy, although De Brunhoff doesn’t use this phrase. I base my interpretation here on Maksakovsky:

“Simple commodity economy is production for exchange but without the use of wage labour. Artisans and private farmers produce commodities with their own means of production.” In its more developed form it involves monetary exchanges. (Maksakovsky, p. 37 FN33)

For the purpose of Marx’s analysis of money, the simple commodity economy involves:
– private production
– exchange of commodities using money

A simple commodity economy is not capitalism because capitalism involves ownership of the means of production and the hire of wage labour by those who own the means of production. The money used to buy means of production and wage labour is called capital. Capital can be money but not all money is capital.

Marx develops a general theory of the circulation of commodities and money. By contrast, capitalism develops institutions such as Banks and money such as credit, which are specifically designed for the needs of capitalism. Marx delays detailed treatment of these until Volume 3.

“One becomes unable to see how the general laws of monetary circulation continue to function in the capitalist form of production where there is a special monetary circulation, that of credit” (SBD, p. 20)

The three essential functions of money (measure of value, medium of circulation, money – object of demand) are spelt out in detail by Marx in both Critique Ch 2 and Capital Ch 3. De Brunhoff argues that all three of these functions have to be taken together as an ensemble “which in their entirety constitute the general theory of money” (p. 20) She criticises Hilferding’s Finance Capital for discussing inconvertible paper and credit before discussing the role of money hoarding, a part of Marx’s third function of money. “The monetary theory of credit involves a knowledge of the role of hoarding”. She argues that Hilferding makes a grave error in discussing capitalist money before outlining the entire general theory of money. (pp. 20-21)

The Good Abstraction

We have already explained the difference between a simple commodity economy and capitalism.

De Brunhoff also differentiates between a barter economy and a monetary economy. Once production transcends individual needs then, in becoming social, it involves exchange. The simple commodity economy that Marx discusses transcends barter and uses money for exchange. Once gold money emerges as always useful or the “god of commodities” (Marx) or as the universal equivalent then hoarding of this precious substance will follow. Hoarding becomes one of the essential functions of money (categorised under money as money). Marx chooses his starting point (private commodity production and exchange of commodities using money) because it is a “good abstraction” for explaining the fundamentals and subsequent development of capitalism.

“In simple circulation one studies the ebb and flow of money in relation to other commodities; this abstraction has the appearance of a visible datum, with all the brilliance and solidity of metal. In contrast, the network of debts and credits which Marx rejects as a starting point for the analysis of money, forms an immaterial circuit in which reciprocal obligations and rights confront and counterbalance one another. Why does the “good abstraction” take as its initial object the metallic material of money and not some of the elements already spontaneously abstracted by the very process of monetary circulation”? (De Brunhoff, p. 22)

This is because Marx begins his analysis of capitalism with the commodity and traces the origin of money back to the commodity. Gold emerges as the most suitable commodity to play the role of money. Furthermore, gold as the general equivalent of money excludes other commodities as the general equivalent. “It has a socially validated monopoly of equivalence, and this is what characterises its social function as money.” (De Brunhoff, p. 23)

Marx’s method here in choosing a metal as money is a good example of ascending to the concrete, as part of his dialectical approach. It could also be seen as utilising an object to think with. This was also a strategy employed by Seymour Papert, a modern day computer scientist and learning theorist in developing the logo programming language which features a turtle as an object to think with (reference). From the latter perspective a simple commodity economy as explained by Marx could be programmed fairly easily in today’s visual programming languages such as Scratch, Build Your Own Blocks or Kedama depending on the level of complexity required. This could be done up to the point of illustrating Marx’s quantity of money theorem depending on the price of commodities (directly) and the velocity of money (inversely).

This is the opposite of the idea that gold is a symbol of value. Gold is commodity money. Gold as money is distinct from all other commodities. Without a clear distinction between the money commodity and other commodities then all commodities would or could be money and money would be just another commodity. With such thinking the monetary privilege assigned to gold appears arbitrary and unfounded.

Some have argued in Marx’s time (Gray’s theory of labour money, Proudhon) and today (The Zeitgeist Movement and The Venus Project) that the key to solving the problem of capitalism is to abolish money or the privileged place of money. What this misses is that the origin of money, actually the necessity of money, is in the commodity with the commodity being a unity of use value and exchange value. Hence, to solve the problem of capitalism you have to solve the problem of the commodity, which is a far bigger or more fundamental problem.

Although it originates from all commodities, money is special and develops its own properties and functions distinct from other commodities. The important point is not the metal aspect but moneys’ unique role as the general equivalent.

Having established that money is a general equivalent form the next step is to articulate all the functions of this form. De Brunhoff stresses the importance of considering all these functions of money together “which complement one another, different yet necessarily linked with each other, which only in combination preserve and reproduce the general equivalent form … etc. (p. 25)

A “Complete” Theory of Money
(1) The Measure of Value (2) The Medium of Circulation (3) Money

“One is immediately struck by the discussion of the third point under the heading “Money” in a chapter entirely devoted to money and it various functions” (De Brunhoff p. 25)

Yes indeed! One aspect of this is that money as gold disappears. In Marx’s time gold money had disappeared in its role as (1) measure of value and (2) medium of circulation. And since Marx’s time it has further disappeared in its role as world money. So, money originates in the commodity and then more or less totally disappears.

This disappearance of commodity money highlights the importance of understanding Marx’s analysis of the fundamental functions of money based on its origin as a commodity. The material disappears but the functions do not.

a. Money, Measure of Value

What determines the general price level?

The subjective utility theories of price that overthrew and replaced Marx in mainstream economics have created a difficult problem for themselves that was already solved by Marx.

With gold as the universal money equivalent then the value of gold is determined by socially necessary labour time. Gold money can be used to assign price through a general equation:
x whatever commodity = y money commodity
and so commodities have a price before they enter circulation. Problem solved.

Note though that the actual presence of gold is not required for this function. To assign price through the above equation gold money does not have to be physically present. Ideal or imaginary money will do the job. It has become legally sanctioned as money of account pounds, shillings, pence, etc.

b. Money, Medium of Circulation

commodity – money – commodity

Money measures commodity value. Then “money as medium of circulation is not merely the manifestation but the practical guarantee of the role of money as measure of value” (p. 30)

Function 1, Measure:
1 ton iron = 2 ounces of gold
1 quarter wheat = 1 ounce gold

Function 2, Medium of Circulation:
1 ton iron → 2 ounces of gold → 2 quarter wheat
One ton of iron is sold for 2 ounces of gold which is then used to purchase 2 quarter of wheat. The physical presence of money in the circulation process acts as a practical guarantee that the measure of value function has been performed correctly.

De Brunhoff points out the intimate connection between Function 1 and Function 2:

“Only circulation, in which money effectively replaces the commodities, gives the fixing of prices its full significance. The first function of money is the condition for the second, but the second is the necessary complement of the first. Without this connection, money would have only a purely functional character, as medium of circulation, or a purely “ideal” character, as unit of account” (p. 31)

The anti-Quantity laws of money which Marx develops flow directly from the intimate connection between functions 1 and 2:

“… the quantity of money functioning as the circulating medium is equal to the sum of the prices of the commodities divided by the number of moves made by coins of the same denomination. This law holds generally” (Marx, Volume One, Ch 3)

Marx’s anti-quantity law is the opposite of the view that the quantity of money determines prices.

If the quantity of money in circulation depends on commodity prices then what happens if there is too much or too little money in circulation? This is where hoarding enters the picture, which is part of the third function of money:

“The difference between the total stock of gold and the amount which circulates is absorbed by hoarding … These points form the basis for Marx’s refutation of the Quantity Theory of Money. Thus the intrinsic connection between these functions rules out not only their separation but their presentation in any old order and their confusion with one another. Hence the metamorphoses of money in circulation (edit: she means here that money may change between gold, tokens, paper) do not raise any question about the value of gold as general equivalent and measure of value; they affect only the instrument of circulation” (p. 32)

This is all very clear provided money is gold. So we can surmise that Marx made money gold in part to make his argument clear or concrete. As mentioned above, it would be worthwhile to present this visually in one of the modern visualisation programming languages. Alan Kay, computer scientist, drew inspiration from learning theorist Jerome Bruner’s slogan “Doing with images make symbols” in developing etoys in smalltalk. (Alan Kay’s Educational Vision) We can write a program using gold as a concrete manifestation of the universal equivalent to make a qualitative and quantitative model of Marx’s version of the circulation process. Marx’s philosophy of ascending to the concrete can be programmed on modern media.

This is all clear when money is gold. But the reality is that gold money disappears.

“Its functional existence absorbs, so to say, its material existence. Being a transient and objective reflex of the prices of commodities, it serves only as a symbol of itself, and is therefore capable of being replaced by a token” (Marx, vol 1, Ch 3)

In circulation the wear and tear on coins reduces their weight and makes demonetization inevitable. The standard weight of gold coins ceases to be a real equivalent of commodities. Gold is replaced by tokens. Marx’s response to this is to say that the tokens which replace gold must represent the real value of gold quantitatively. Representative or symbolic money or tokens will suffice. Gold does not have to be present.

Nevertheless, it appears that the ongoing dematerialisation of money as governments introduce fiat money (government issued legal tender, inconvertible, used for the payment of taxes) into circulation appears to totally undermine or abolish Marx’s alleged laws of circulation.

“What Marx called ‘the inherent laws of circulation’, based on the role of the money commodity, appear to be abolished when the medium of circulation, with no intrinsic value, depends on government decisions which fix the amount issued.” (De Brunhoff, p. 33)

Since the Nixon Shock (1971) all reserve currencies including the dollar and euro have been fiat money

De Brunhoff goes into Marx’s differences with Ricardo, who supported a Quantity theory of money, that the amount of money in circulation determines prices. What arises from that discussion is the need to distinguish between the different roles of the different types of money – gold, fiat, credit. Tooke and Marx criticise Ricardo for attributing the same economic role to different types of currency. Ricardo was obsessed with the quantity of money in circulation without distinguishing between the different types of money.

The different types of money arise from the different functions of money:
– measure of value
– medium of circulation

Ricardo’s mistake was that he “regards currency, the fluid form of money, in isolation” (Marx, Critique, Ch 2)

This comment by De Brunhoff is crucial:

“The loss of metallic substance in circulation never results in reducing money to a mere medium of circulation. Rather, it is an indication of the functional difference between money as measure of value and money as an instrument of circulation” (p. 35)

How may these different types of money be categorised?

De Brunhoff quotes Charles Rist to good effect here:

“The theory of paper money is to that of metallic money as in medicine the study of the pathology of an organ is to that of its normal anatomy and physiology” (p. 35)

Marx is very clear that credit follows different laws to true money and so separates off and delays the discussion of credit to volume 3.

“During the following analysis it is important to keep in mind that we are only concerned with those forms of money which arise directly from the exchange of commodities, but not with forms of money, such as credit money, which belong to a higher stage of production” (Marx, Critique, Ch. 2)

So gold is true money (but no longer exists legally!), credit is false money (because it is only of use in circulation, functions 1 and 3 are ignored?) and the US dollar is diseased money (legal but printed in excess – Quantitative Easing)? This need further clarity.

Is fiat money true, false or diseased? De Brunhoff is ambivalent here. See page 36. She says it is true insofar as it represents or symbolizes gold. But then suggests it is false because it is condemned to remain in circulation, that it can’t be hoarded. Remember that the ability to hoard, the third function of money, is necessary to complement the other two functions, since hoarding is essential to control the quantity of money in circulation. She concludes that fiat money is true but bad money. But is this true, don’t banks withdraw paper money? I’m confused about this issue of whether or not paper money can be hoarded.

Was Marx a metallicist? No, but he was a 3 way functionalist who asserted that true money, commodity money, which originates before capitalism, followed definite laws. And these laws do not magically disappear when full blown capitalism arrives and develops it own forms of diseased money such as credit.

The important issue is the starting point. If you start your analysis of money with fiat paper money which is arbitrarily added to circulation you are bound to get it wrong:

“It is thus evident that a person who restricts his studies of monetary circulation to an analysis of the circulation of paper money with a legal rate of exchange must misunderstand the inherent laws of monetary circulation. These laws indeed appear not only to be turned upside down in the circulation of tokens of value but even annulled; for the movements of paper money, when it is issued in the appropriate amount, are not characteristic of it as token of value, whereas its specific movements are due to infringements of its correct proportion to gold, and do not directly arise from the metamorphosis of commodities.” (Marx, Critique, Ch. 2)

So, what are Marx’s laws of money?

  • The quantity of true money (gold) in circulation is directly proportional to the sum of prices of commodities and inversely proportional to the velocity of circulation of the money
  • The quantity of tokens in circulation is equivalent to the quantity of true money (gold) that the tokens represent

Gold can’t be replaced by things without value, by symbols, except when it is means of circulation. An awareness of 3 functions of money and how they are intimately connected is essential to appreciate this. Circulation allows tokens – coins, paper – it does not negate the other functions

“Paper money is a token representing gold or money. The relation between it and the values of commodities is this, that the latter are ideally expressed in the same quantities of gold that are symbolically represented by the paper. Only in so far as paper money represents gold, which like all other commodities has value, is it a symbol of value. [37]“ (Marx, Vol 1, Ch 3)

In the footnote Marx is incredulous at Fullarton for thinking that the replacement of gold with paper symbols can be interpreted as meaning that gold no longer represents the value of commodities or a standard of price.

c. Money, Instrument of Hoarding


The possibility of hoarding arise from the coming into existence of the universal equivalent as a real, material substance. The commodity circuit C-M-C splits into C-M and M-C. Someone sells a commodity and acquires money. Their is no obligation for them to spend that money immediately. Hence, C-M-C is very different from C-C, direct commodity exchange.

The desire for hoarding is simply money lust, money as the ideal abstract wealth.

The real economic function of hoarding is as a regulator of functions 1 and 2, to keep the right amount of money in circulation.

Does money solve the problem of equilibrium between functions 1, 2 and 3? De Brunhoff has some discussion on the differences between Marx and Keynes in their treatment of liquidity and the problem of the limited supply of money. That required further study.

The C-M-C split into C-M and M-C suggests the possibility of crisis because the possibility now arises that buying and selling will no longer be in equilibrium. There is no guarantee that those who buy will sell. But the possibility of crisis is a far cry from the reality of crisis. Marx has shown that for a simple commodity economy there can be equilibrium. Money as such is not the problem. Capitalism is the problem.

“This long analysis explains nothing, nothing except the conditions of the existence of money; by doing this, it prevents the disruptive intrusion of the analysis of money into that of production …” (De Brunhoff, p. 43)

Money is not as important as we tend to think it is. Money is more of a reflection than a source of problems. The diseases of money arise from capitalist production and circulation. Look for the real dynamic behind the veil of money. Money can get in the way of our understanding of the real dynamic

d. Money and Social Power

In the rough drafts of his works (early drafts of the Critique and Grundrisse) Marx discussed the social power accruing to individuals and notions who hoard money.

“But Marx did not retain these analyses of the political and social power inherent in money as a part of his theory of money” (De Brunhoff, p. 46)

This is in stark contrast to those reformers who see “money as the root of all evil” or the elimination of money as the nirvana which will solve all social problems. It is true that money is power but that is more to do with Capital, not money as such. Money accumulates to certain individuals. They have privileges. Some go onto become successful capitalists. But money is not the same thing as Capital. Capital needs to be dealt with later after establishing the fundamentals of money.

The State / Central Bank has some apparent control over money and can exercise power through monetary policy. They can decide to maintain or not maintain a gold standard, they can print more paper money, they can alter interest rates and control credit through fractional reserve banking policies. However, what follows from the outline of Marx’s fundamental functions and laws of money is that in the final resort all this power is more apparent than real.


Marx’s anti-quantity theory is based on the coherence of the 3 functions of money (measure, medium, hoard). It follows that the quantity of money in circulation is proportional to the sum of prices. Capitalist money such as credit floods the money market and breaks Marx’s law. We can either retain Marx’s law and query the legitimacy of capitalist money, ie. see it as diseased, or, we can see all money as non diseased. If we do the latter then money doesn’t make a great deal of sense, fundamental truths of the functionality of money and capitalism are lost and we are left in a sea of confusing surface phenomenon. That is my understanding at this point.

Some big questions epistemological questions need to be kept in mind:

  • Is it possible for any of the 3 functions of money described by Marx or their intimate interrelation to be somehow negated?
  • How is it possible for a non commodity such as the diseased US dollar to measure value accurately?

update (10th Jan): This review of Suzanne de Brunhoff’s book is only a review of Part one: The Marxist Theory of Money.. Hopefully, I’ll also be able to review her part 2: Money and Capitalism, which refers extensively to Vol 2 and 3 of Capital.

Further Study
Updating by De Brunhoff of her original book:
De Brunhoff (2003) Marx’s contribution to a search for a theory of money

How can paper money represent Value? Articles which argue how fiat paper money can replace gold as a measure of value (MELT = monetary equivalent of labour time)
Duncan Foley (2003) Marx’s Theory of Money in Historical Perspective
Fred Moseley (2004) The “Monetary Expression of Labour” in the Case of Non-Commodity Money

Article with some original ideas about the real function of credit:
Campbell, Martha (1997) Money in the Circulation of Capital

A modern fundamental challenge to Marx’s concepts:
Likitkijsomboon, Pichit. Marx’s anti-quantity theory of money: A critical evaluation

De Brunhoff, Marx on Money
Hilferding, Finance Capital
Maksakovsky, Pavel. The Capitalist Cycle
Marx, Grundrisse
Marx, Contribution to the Critique of Political Economy
Marx, Capital, Vol 1
Marx, The Value Form. Appendix to the first German edition of Capital
Murray, Patrick. Money as Displaced Social Form: Why Value cannot be Independent of Price
The Venus Project
The Zeitgeist Movement

Martha Campbell debunks the quantity theory of money

Marx’s Explanation of Money’s Functions: Overturning the Quantity Theory (2003) by Martha Campbell. The comments about this paper by conference participants in the third column at Papers should be read in conjunction.

My comments here are partly a summary and partly reflections that have arisen from thinking about Campbell’s paper. As always, read the original.

Marx was fully aware that capitalist money or credit is not gold. Yet he insists on developing a theory of money based on gold in Capital vol 1 and 2. Campbell argues that he does this because he believed that the main obstacle to understanding anything about money is the Quantity theory. Hence, we are implicitly involved in a discussion where starting points are of vital importance. Marx starts with gold as money, other economists start with what they find on the surface of social reality. In my opinion, Marx wins out because his starting points are superior to those of other thinkers.

Marx’s anti-quantity theory is that the commodity is the dog and money is the tail. The quantity theory position is the opposite: that money is the dog and the commodity is the tail

Campbell’s emphasis is on the 3 inversions or reflections of commodity relationships as a conceptual refutation of the Quantity theory of money. The 3 inversions are the mirror image reversals of these principles:
– that commodity value determines money value
– that commodity circulation determines the properties of money
– that commodity prices determines the quantity of money in circulation

So, Campbell is arguing that these principles from Marx are fundamentally correct and that the Quantity theory is incorrect because it confuses the reflection with the source. But it is more than a confusion because capitalism creates it own form of money, credit money, which does obey the inverted principles. With credit money the inversions do hold true:
– money value determines commodity value
– the properties of money are determined by commodity circulation
– the quantity of money is determined by commodity prices

It’s obvious that the quantity theory is right, isn’t it? Ben Bernanke decides to print more money to “save” the economy. In his view inflation is better than deflation. So the value of money must decline. The quantity of money Bernanke decides to print determines the value of money. This is what Marx says is wrong.

In what sense then is Marx correct? There are different types of money – gold money, paper money issued by the central bank and credit money which can be issued by anyone. You could say that Marx’s principles hold true for gold money or paper money that is convertible to gold but don’t hold true for other types of money. So, given that, since 1971, we no longer have a gold standard then aren’t Marx’s theories no longer relevant?

Since credit money escapes from Marx’s first function of money (money is a measure of value using the commodity gold as the measure) then, in that sense, it is not true money. The same could be said of paper money issued by governments through the printing press (quantitative easing) in times of crisis. Everyone knows that this money is not worth much. In times of crisis the value of this sort of money crashes back to earth, the earth that contains gold as a true measure of value.

I also found Campbell very helpful in pointing out clearly that in Chapter 3 of Capital vol 1 Marx is discussing the price form, which is separate from any discussion of a measure of price. Part of the problem with “economics” is that it is obsessed with measurement, ignores social forms in its own analysis and does not even notice that Marx is emphasising that many of the thing we take for granted (eg. the commodity, money, price) have a social origin and meaning. Marx explains how capitalism really functions as a social system in contrast to “economists” who seem to do little more than watch the stock market go up and down.

Price and value must part company. This is a feature of Marx’s theory and not a problem. Since money exists concretely as gold separate from commodities then it is certainly possible for price to deviate from the abstraction value. The price form is both an ideal expression of value and a realised misrepresentation of value. The commodity is caught in the middle of the social processes of production and exchange, “they link the activities that produce them” (page 9)

Campbell poses a crucial question that worried me in my early study of value theory:

“If price doesn’t express the right quantity of value, then why bother with value at all, since it is of no help in formulating a theory of price?”

Marx’s value theory seemed to me to be so difficult to understand that I could certainly comprehend why many give up on it and prefer to start at the more practical point of price. The answer is that if we start with price and not value then we will never understand the social forms that constitute the internal dynamics and contradictions of capitalism

Since prices can and do deviate from values then part of our answer to the Quantity theorists is that they are talking about prices and we are talking about values. Prices may be all over the place, eg. during inflation, but values are the important underlying measure of how the economy is really performing.

In his comment Geert Reuten agrees but anticipates that more work needs to be done with respect to price:

“ …we agree (Campbell and myself at least) that “quantity of money” plays no role in the measurement of value … in the end Marx does have a “quantity of money circulation theory of price” (the name quantity theory of money is confused anyway, since for the proponents it is a “quantity of money theory of price-level”) – even if it is about an inverted reality (p.18), it has nevertheless real effect”

Moving on. Campbell’s argument about money beginning as a commodity (gold) and then progressing, since Marx’s death, to not being a commodity are not so clear to me.

“… money is the materialisation of value … money must be a commodity, at least until it can be shown how money could represent value without being a commodity” (page 6).

“Marx shows that money is not a commodity … by the end of Chapter 3” (page 17)

“ … it seems unlikely that he (Marx) would consider the development of international monetary institutions to be impossible. Thus, of the two functions Marx associates with gold, one is pre-capitalist (hoards) and the other is historically contingent (world money)” (page 27)

“By the collapse of the credit system into the monetary system, he means instead that payments must be made in money (whatever the form of money happens to be)” (page 30, footnote 112)

My question here is: How could money represent value accurately without being a commodity? Campbell doesn’t seem to provide an answer to that in her paper.

This point was also raised by some of her fellow presenters at the conference.

“I don’t think Martha is clear enough on the crucial question of whether or not money has to be a commodity in its function as measure of value … how else could the value of commodities be measured, except by another commodity?”


“I believe that Marx’s commodity-money basis is unnecessarily somewhat brushed away (referring to pages 17 and 27)… This brushing makes the general argument less instead of more convincing.”

Smith: (referring to the Campbell quote on page 30 above)

“I’m not at all sure Marx meant that. I think it is more likely that he thought that inter-state conflicts will prevent any national currency from serving as the ultimate and unquestioned form of world money, and so at some point in a crisis in the world economy there will always be a “flight to gold.” Regarding the former, I think he was correct (and so I also think he probably wouldn’t have agreed with you and Mike Williams (p. 27) that the lack of a world monetary authority is a mere historical contingency, if what you mean by that is some regime of global governance that establishes a particular currency or international clearing unit as world money). Regarding the latter (my correction, the original says former here), I don’t see any reason why interstate conflicts (and the inter-capital conflicts inseparably connected to them) can’t be played out indefinitely through massive disequilibriums in the currency exchange rates of the leading hard currencies, followed by abrupt revaluations of those rates. In every crisis in the world market there is then a flight from one (or more) hard currency to another (or group of others).”

Martha Campbell’s paper and the responses to it by the other conference participants give me confidence that there are marxists in the world still thinking hard about the important questions. I look forward to studying more of the papers from the 2003 conference site: Marx’s Theory of Money: Modern Appraisals

marx on money

Apart from Marx himself, so far the most useful book I have read about Marx and money is:
Marx on Money by Suzanne De Brunhoff (1973 French, 1976 English translation). The link goes to a searchable pdf which can be downloaded without sign in. A review of part one of this book has now been published on this site, here

I’ll just setup this page now as a placeholder since we need a thread to post links about Marx on money. This page is being updated as new references come to hand.

updates (see comments for discussion about these):
Introduction to Money and Totality: Marx’s Logic in Capital by Fred Moseley. Provides a useful overview and the authors conclusion of the outcomes of the papers presented to the 2003 Marx’s Theory of Money conference.

Marx’s Explanation of Money’s Functions: Overturning the Quantity Theory by Martha Campbell. Also see the comments about this paper in the third column at Papers. Now summarised and discussed on a separate thread on this site: Martha Campbell debunks the quantity theory of money

Marx’s Theory of Money in Historical Perspective by Duncan Foley.

The “Monetary Expression of Labor”: in the Case of Non-commodity Money by Fred Moseley.

Money in the Circulation of Capital by Martha Campbell. An excellent account of the importance of the Volume II material on turnover.

The Culmination of Capital: Essays on Volume III of Marx’s ‘Capital’ (v. 3)

Unpacking the value suitcase

This will never be finished so I will publish now.

Clarifying the meaning of and distinguishing between the words: value, wealth, quality and money

Suitcase words: Marvin Minsky (The Emotion Machine) has coined this marvellous term to describe words that are not clearly defined and mean different things to different people. For example, Consciousness is a suitcase word. It can mean unifier, self awareness, identity, animator of the mind, provider of meaning, detector of feelings. It refers to many different mental activities that don’t have a single cause or origin. In part Minsky’s book is about the need to create a new vocabulary in order to discuss the workings of the mind.

So, let us discuss the value suitcase. Over the years it has become a very large suitcase with many thousands of words devoted to different interpretations of value theory resulting in a tangled mass of incoherent vocabulary.

I start with the folk perspective because what we pick up as the everyday background noise of the meaning of words does influence our understanding when we get around to analysing those words in more detail. We cannot properly acquire new understandings without first subjecting our old understandings to critical scrutiny. No construction, without destruction.

Here are some popular uses of the word value:
1) Tom is good value, ask him to do the job
2) That car is good value for money
3) Gold increases in value during economic recessions
4) Steve Jobs adds value to Apple shares
5) The role of a teacher is to add value to their students
6) It was a valuable experience to attend that Noel Pearson lecture

So, in folk use, value might be used to describe an attribute of a person, a commodity (two examples, car and gold), a business, a process or an experience. In some cases there is a close connection between value and money (sentences 2 and 4) but in other cases it refers to the ability of certain people to successfully transfer their skill to a job of work or to other people. It can also refer to a learning experience. In all of these cases value is a good thing and the more value there is the better.

In Capital, Marx doesn’t start with value. He starts with the commodity and then splits the commodity into something which possesses both use value and exchange value. It turns out later that exchange-value is the form of appearance of value. Exchange value is “observable” in a transaction. For example, one 32GB USB stick = 20 litres of Pura full cream milk. We can equate these values in real life but more realistically in our imagination and it does not have to involve money. Value is the underlying category, an abstraction, a theoretical underpinning of exchange-value.

In Marx’s terms value has a form, a substance and a magnitude. The form of value is its capacity to be exchanged. The substance of value is embedded abstract labour. The magnitude of value is the amount of embedded labour or socially necessary labour time. This thumbnail needs to be discussed in more detail later.

Marx clearly distinguishes between value and use value. For Marx value is a social product (or in his language, a social form). It only exists in a commodity society, a society where products are produced and sold to others. For Marx value does not exist, or only exists in embryonic form, in primitive society where hunters and gatherers are mainly working for themselves. For Marx value is historically contingent whereas use value is not. Use value refers to the properties of products that make them useful. For example, a car is useful for transportation. This is true irrespective of whether it is bought and sold in the marketplace. Marx makes a radical separation between the usefulness of products (true for all social systems) and their value, which is only true for products which are made to be sold in the marketplace. Such products are defined as commodities.

What is the difference between the folk perspective of value and the Marx perspective of value?

Well, Marx mercilessly dissects or interrogates the commodity and teases out a variety of meanings and distinctions (use value, exchange-value, value). For Marx value becomes a central theoretical concept which is complex in its own right, having social form, substance and magnitude. But for Marx a line is drawn between value and use value.

So, looking again at the starting sentences and adding some annotations about what the folk use of value means in each case:
1) Tom is good value, ask him to do the job (Tom is useful at work of an unspecified character)
2) That car is good value for money (I am prepared to exchange my money to buy that car)
3) Gold increases in value during economic recessions (Gold is special for unstated reasons because it is always valuable, even in economic crises)
4) Steve Jobs adds value to Apple shares (some individuals excel at their value interventions in the capitalist system because of their creative design and marketing skills)
5) The role of a teacher is to add value to their students (in the “knowledge economy” value can refer to added knowledge too; the teacher transfers their knowledge to their students)
6) It was a valuable experience to attend that Noel Pearson lecture (an experience can be valuable or personally enriching in its own right)

The folk usage of the word value does either mean or imply the similar concepts which Marx discovers in the commodity (usefulness, exchangeability), adds on a few more (creativity, knowledge transfer, enrichment) and then fuzzily blurs them all together. In folk usage value is a suitcase word. Folks are using the word value as a suitcase whereas Marx is starting with the commodity and meticulously teasing out various meanings in his analysis.

The folk perspective on value and Marx’s perspective also deviate when it comes to labour saving or productivity increasing technology. With technological progress the value of manufactured products decreases. They become cheaper to buy in the marketplace.

I said above in relation to the six introductory sentences which illustrate a variety of usages of value, that,

In all of these cases value is a good thing and the more value there is the better

But now I am pointing out that as technological productivity increases then the value of the manufactured products decreases. That experience is part of popular consciousness. We all know that we possess more products than our parents generation. We possess them because we can afford them since comparable items are cheaper relative to our wages than they used to be. But does the concept of declining value universally enter the popular consciousness?

7) Commodities are cheaper for my generation than previous generations. We’ve never had it so good!

There may be some awareness of this truth but it is not general folk wisdom. Why not?

Well, often prices don’t go down. Rather you buy a fancier equivalent of the commodity you want for the same price. You are getting more value for money but not getting the feeling that things are cheaper in an absolute sense. Windows 7 replaces Windows 6. It really doesn’t do anything different but has a few extra bells and whistles so you end up paying a similar price. In reality, absolutely free alternative operating systems such as Ubuntu are equivalent and better in some ways (no viruses).

Some prices do go up. For example, land, petrol, electricity, internet access in Australia.

It is cheaper to build a house now than previously, due to technological and organisational development. The house is cheaper but the land is often more expensive due to supply and demand for good location.

Petrol prices are subject to the control of a cartel (OPEC)

The price of electricity goes up due to lack of forward planning by governments who don’t build surplus capacity in good time.

The National Broadband Network (NBN) is potentially a good idea but due to government incompetence it is rolled out in a more expensive fashion than is needed.

Environmental costs contribute to rising prices. Once again, governments are generally incompetent in managing these issues, Julia’s carbon tax being a good current example.

It is hard to accurately compare our generation with previous generations. This arises from the nature of capitalist development. We have more things but in the main they are different things to our parents possessions. When I grew up we did not own a flush toilet, an electric frig, a TV, a microwave or a computer. They were either invented or became affordable consumer items later. Even the items that are common to both generations differ substantially. Houses and cars are far more sophisticated today, they possess added gadgets and functionality which was not present previously. This rough comparison makes it obvious that the current generation has far more material possessions than previous generations. The value of producing equivalent and / or better commodities has declined over time mainly due to productivity improvements.

What is the difference between value and wealth?

In folk usage wealth may refer to:
8 ) There are a wealth of ideas in the mind of that intellectual
9) James Packer is wealthy (aka filthy rich)
10) Capitalism increases the wealth of society but that wealth is distributed unevenly

If you substitute wealth for value in my original sentences it doesn’t work out. You wouldn’t say:
1′) Tom is good value wealth, ask him to do the job
2′) That car is good value wealth for money
5′) The role of a teacher is to add value wealth to their students
but you could say:
4′) Steve Jobs adds value wealth to Apple shares

This is because value means more than the finished product or money. It also means or implies productive labour. Wealth doesn’t fit in those sentences because it usually refers more to the end product or the market value of the end product than the productive labour required to obtain that product.

Marx and his predecessors also distinguished between value and wealth. Wealth is the sum of all use values irrespective of whether they require labour. Hence unadorned natural products, eg. virgin land, are part of wealth but not part of value. In Marx’s terms nature is not a source of value. Marx approved of his predecessor William Petty in distinguishing between labour and nature as sources of wealth:

“Labour is … not the only source of material wealth, ie of the use-values it produces. As William Petty says, labour is the father of material wealth, the earth is its mother.” (Marx, vol 1)

Wealth is the sum of all use values, which are concrete and particular. Wealth originates in both nature and labour. This applies to any society. Value is a creature of capitalism or a society where commodities are exchanged in the market place and display their exchange-value there.

What is the difference between value and quality?

In Marx’s terms value is not metaphysical. By metaphysical I mean broad trans historical concepts which attempt to define meaning in a permanent or grandiose sense. Marx’s analysis is relevant to capitalism, not all of history. Marx is not writing a theory of everything to last for all time but is doing a specific critique of capitalism and classical political economy, the partly correct then existing theories of his predecessors Adam Smith, David Ricardo and others.

It is a different approach to my memory of the sense in which Quality is discussed at length in Pirsig’s Zen and the Art of Motor Cycle Maintenance. I had the sense there that if only the slippery concept of Quality could be grasped then that would be similar to solving the riddle of life itself.

However, folk usage does not always embrace metaphysical texts. In folk usage there is not a clear distinction made between value and quality. If you take the sentences I began with:
1) Tom is good value, ask him to do the job
2) That car is good value for money
3) Gold increases in value during economic recessions
4) Steve Jobs adds value to Apple shares
5) The role of a teacher is to add value to their students
6) It was a valuable experience to attend that Noel Pearson lecture

For most of them you could substitute the word quality for the word value. It is only in sentence (3) that this substitution does not work. This is because the phenomenon of gold increasing in value during economic recession requires a detailed economic theory to explain it. Even though the sentence is part of folk usage the explanation of that sentence is not.

What is the difference between value and money?

From the original sentences value is measured in money terms in sentences 2 and 4 or at least the connection is clear:
2) That car is good value for money
4) Steve Jobs adds value to Apple shares

In folk terms the value suitcase is much broader than money and encompasses usefulness, creativity and experiences as well.

For Marx value originates from labour and evolves into a universal equivalent, gold money, which further evolves into paper money. But for Marx value is in motion. The capitalist uses money or credit to buy labour and means of production, proceeds to a production process, sells the resultant commodities and finally invests more into the production process in a continual cycle. Value moves through this whole process dynamically.

So value is far more than money in both folk and Marx’s usage but in different ways.

The folk connotation of value is that it is a good thing, that valuable things (people, commodities, experiences) are worth having. This is different from the Marxist understanding, that value is a creature of capitalism an underlying theoretical concept which is the staring point to explain the motion of the whole capitalist system. For Marx, value is the starting point for further analysis and understanding of capitalism.

uncomfortable science

Uncomfortable Science

In her new blog Nicole Pepperell points out that a scientific approach requires epistemological humility but this does not preclude scathing critique and social activism. The nature of the scientific approach requires both.

It will likely be counter-intuitive for many readers for me to suggest that Marx’s work operates from a similar standpoint of humility – a similar sense of the boundedness and limitations of our present time – encased in a scathing critique of the so-called “scientists” of Marx’s own time, who claimed to be able to find a solid and incontestable ontological ground for their fleeting “discoveries”, who pretended to elevate short-term insights of a particular historical configuration – as if these had always and ever been the implicit and latent truths of material nature or human history. In Marx, this sense of humility – this awareness of our boundedness to our own time – did not stand in the way of a present-day commitment to practical transformation: it was instead its very basis. But even revolutionary transformation stands at a kind of event horizon – obliquely reaching forward with sensibilities engendered in our own moment, grasping for gratifications we have been socialised to desire – but in the process creating a new world, whose sensibilities and desires are necessarily opaque to us.

What is the nature of Marx’s contribution to the scientific world view? I’m looking forward to more discussion of this question.

marx and the domains of ignorance

The domains of ignorance:

Known unknowns: All the things you know you don’t know
Unknown unknowns: All the things you don’t know you don’t know
Errors: All the things you think you know but don’t
Unknown knowns: All the things you don’t know you know
Taboos: Dangerous, polluting or forbidden knowledge
Denials: All the things too painful to know, so you don’t
– from The Domains of Ignorance

The domains of ignorance are relevant to Marx. Some people don’t read it because it is taboo. Some people read it and think they understand it and they don’t. Some people have a superficial knowledge of Marx and think that is good enough. But none of that really explains the extent of the marginalisation of Marx. I think the main issue is that he is difficult to understand. The thing missing from the domains of ignorance is contradictory knowledge.

This problem is not new. Isaac Deutscher provides an anecdote about the knowledge of Marx in that era (the 1930s):

“Capital is a tough nut to crack, opined Ignacy Daszyński, one of the best known socialist “people’s tribunes” around the turn of the 20th century, but anyhow he had not read it. But, he said, Karl Kautsky had read it, and written a popular summary of the first volume. He hadn’t read this either, but Kazimierz Kelles-Krauz, the party theoretician, had read Kautsky’s pamphlet and summarised it. He also had not read Kelles-Krauz’s text, but the financial expert of the party, Hermann Diamand, had read it and had told him, i.e. Daszynski, everything about it”

Marx’s critique of political economy is old knowledge, forbidden or marginalised knowledge and difficult to understand knowledge. Because it was written 150 years ago many think it is no longer relevant. Because communism is believed to have been tried and found wanting many who want radical change think it could not provide the answers. Because Marxism is an insignificant part of mainstream education and in particular not taught in the economics faculty then it is only going to be accessed by those who think outside of the mainstream. Finally, the many volumes of Capital and related works are difficult to understand for a variety of reasons.

Conceptually the work is very rich and it is difficult to keep the whole of it in your head. Marx uses a method of investigation (his adaptation of Hegelian dialectics) that is unfamiliar to moderns. Much of the language he uses is unfamiliar and this issue is exacerbated through a variety of translations. The prose is dense. Marx established a precise, strict terminology, eg. use value, exchange value, value, relative and absolute surplus value and then uses it rigorously for hundreds of pages. Therefore you must pay close attention, otherwise you are lost. He frequently uses French and Latin quotations. He also employs fascinating, tangential footnotes, which must be read.

The economic crisis which began in 2007 revealed an intellectual crisis, which did already exist, but was not so obvious before the economic crisis. For much of time following WW2 economic crisis was absent, the capitalists had appeared to work out how to stabilise an unstable system. That assumption has now been shown to be false.

My contention is that to understand the inner workings of capitalism you have to understand Marx. Although this will not provide a magical solution to the current issues of ongoing economic crisis it will provide a deep appreciation of the inner contradictions of capitalism that make it forever an unstable and unpredictable system.

Class, Capital and Crisis

Australian economist John Quiggan (“Commentary on Australian & world events from a social-democratic perspective”) has written the first of three blogs about the Marxist themes of Class, Capital and Crisis: Marxism without revolution: Class


And for now, the ruling 1 per cent has managed to turn the anger generated by their failures to their own political advantage. But, far more than in the 1980s and 1990s, or even the first decade of the 2000s, the opening is there for a radical alternative. Even within the dominant class, faith in the beneficience of markets in general and financial markets in particular, has largely dissipated. What remains is a grimly determined class view that “what we have we hold”

On the correlation between Noel Pearson’s and Mao Zedong’s dialectical outlook

I’m not saying that Pearson has even read Mao. I wouldn’t know. I suspect he hasn’t because he has invented his own terminology, which is different from classical marxist terminology. This is not unusual. Dialectics has been discovered and rediscovered many times in parallel fashion. eg. quite a few scientists employ some sort of dialectical method.

Mao’s explanation of dialectics is the clearest that I’m aware of. Partly because of that I see it as a useful exercise to outline the connection between Pearson’s philosophy and Mao’s. The fact that Pearson has invented his own independent terminology – and in all likelihood has come to his philosophy by a different pathway – makes the comparison all the  more interesting. “Great minds think alike” – or something like that.

Most of the quotations below come from the following two essays:

White guilt, victimhood and the quest for a radical centre by Noel Pearson (2007)
On Contradiction by Mao Zedong (1937)

Dialectics as the way in which things develop


The fundamental cause of the development of a thing is not external but internal; it lies in the contradictoriness within the thing

Qualitatively different contradictions can only be resolved by qualitatively different methods

This dialectical world outlook teaches us primarily how to observe and analyse the movement of opposites in different things and, on the basis of such analysis, to indicate the methods for resolving contradictions


My contentions are these. First, it is important to correctly identify the fundamental dialectical tensions that define human policy and political struggle. Second, the resolution of each of these tensions lies in their dialectical synthesis, and not through the absolute triumph of one side of a struggle or a weak compromise. Third, other subsidiary struggles fall out of these classical conflicts. Fourth, complexity arises because questions of human policy are not confined to the neat and isolated categories of a ten‐point list. Rather, they involve a number of tensions simultaneously

Importance of all sided, concrete analysis and the identification of the principal contradiction


Lenin … said that the most essential thing in Marxism, the living soul of Marxism, is the concrete analysis of concrete conditions … Without concrete analysis there can be no knowledge of the particularity of any contradiction

Lenin said:

“… in order really to know an object we must embrace, study, all its sides, all connections and “mediations”. We shall never achieve this completely, but the demand for all-sidedness is a safeguard against mistakes and rigidity”

There are many contradictions in the process of development of a complex thing, and one of them is necessarily the principal contradiction whose existence and development determine or influence the existence and development of the other contradictions … in studying any complex process in which there are two or more contradictions, we must devote every effort to finding its principal contradiction

Aboriginal people are faced with a wide variety of problems – substance abuse,  dependency on passive welfare, racism, dispossession and trauma.

Out of this variety of issues Pearson identifies the main problems of the aboriginal people as substance abuse and dependency on passive welfare

He doesn’t reject or dismiss the importance other problems (racism, dispossession and trauma) but he does distinguish clearly between the current main problems and the longer term historical legacy, putting these latter problems in a secondary position for now.

“When abusive behaviour is deeply entrenched in our communities it is not the material destitution , the social ills and historical legacy that fuel the abuse epidemics. It is the epidemics that perpetuate themselves.”
On the human right to misery, mass incarceration and early death (October 2001).

This analysis gives hope and real guidance because it means aboriginal and white people can get on with tackling real and urgent issues rather than becoming passive (paralysed by the complexity) and possibly guilty about a huge morass of unresolved issues. Pearson rejects “symptom theory thinking”, that the main reason for substance abuse is the despair, hopelessness, social dislocation of aboriginal communities and other “underlying causes”. He identifies such thinking as a real problem, causing paralysis.

Identity of opposites (Mao); pyramid and radical centre (Pearson)

Mao’s identity of opposites:

Lenin said:

“Dialectics is the teaching which shows how opposites can be and how they happen to be (how they become) identical–under what conditions they are identical, transforming themselves into one another,–why the human mind should take these opposites not as dead, rigid, but as living, conditional, mobile, transforming themselves into one another”

It is only the reactionary ruling classes of the past and present and the metaphysicians in their service who regard opposites not as living, conditional, mobile and transforming themselves into one another, but as dead and rigid, and they propagate this fallacy everywhere to delude the masses of the people, thus seeking to perpetuate their rule

Pearson’s pyramid and radical centre metaphors:

We are prisoners of our metaphors: by thinking of realism/pragmatism and idealism as opposite ends of a two‐dimensional plane, we see leaders inclining to one side or the other. The naïve and indignant yaw towards ideals and get nowhere, but their souls remain pure. The cold‐eyed and impatient pride themselves in their lack of romance and emotional foolishness: pragmatism and a remorseless Kissinger‐esque grasp of power make winning and survival the main prize every time. Those who harbour ideals but who need to work within the parameters of real power (as opposed to simply cloaking lazy capitulation under the easy mantle of righteous impotence) end up splitting the difference somewhere between ideals and reality. This is called compromise. And it is all too often of a low denominator.

I prefer a pyramid metaphor of leadership, with one side being realism and the other idealism, and the quality of leadership dependent on how closely the two sides are brought together. The apex of leadership is the point where the two sides meet. The highest ideals in the affairs of humans on Earth are realised when leadership strives to secure them through close attention to reality. Lofty idealism without pragmatism is worthless. What is pragmatism without ideals? At best it is management, but not leadership …

Idealism and realism in leadership do not constitute a zero‐sum game. This is not about securing a false compromise. It need not be a simple trade‐off where one splits the difference. The best leadership occurs at the point of highest tension between ideals and reality. This is the radical centre. If the idealism is weaker than the realism, then optimum leadership cannot be achieved. And vice versa. The radical centre is achieved when both are strong

Development is uneven, equilibrium is always temporary


In any contradiction the development of the contradictory aspects is uneven. Sometimes they seem to be in equilibrium, which is however only temporary and relative, while unevenness is basic. Of the two contradictory aspects, one must be principal and the other secondary. The principal aspect is the one playing the leading role in the contradiction. The nature of a thing is determined mainly by the principal aspect of a contradiction, the aspect which has gained the dominant position…. Nothing in this world develops absolutely evenly; we must oppose the theory of even development or the theory of equilibrium


“… it is difficult for the same actor to play several roles in the dialectical process. It is possible for the same person to have an overall intellectual analysis, but practical politics and the production of theory are not the same thing. For example, in a socially and economically successful country, there is competition between interests and forces which represent capitalist principles on the one hand, organisations which represent communal and socialist ideas on the other, and inspired political leaders who perform the synthesis between these contradictions. It is possible for an individual to have an intellectual appreciation of this, but that individual can hardly play all three roles …

I will finish by setting out some reflections on my experience of driving an agenda of rights and responsibilities in Indigenous policy. By the end of the last millennium, it was not possible to continue in this area without facing up to the gaping responsibility deficit. It was a deficit of which I had long been aware, but the prevailing currents were averse to this particular R word. Two other Rs – rights and reconciliation – were ruling. I have never doubted the correctness of our claim to rights; I have made a contribution to the struggle for the rights of my people in Cape York Peninsula, and have continued this contribution. Our rights to our traditional lands, to our languages and our cultures, our identities and traditions are a constant part of our work for a better future for our people.

When I decided that we could no longer go on without saying that our people held responsibilities as well as rights, is was not a repudiation of rights. It was just that all of the talk, all the advocacy, all the analysis, all the leadership, and all the policy and politics was about rights. There was no talk about responsibility. So when we talked about child malnutrition, we spoke of the rights of the children and the responsibility of governments, but we didn’t talk about the responsibilities of parents. We didn’t ask “how come children are malnourished?” It can’t be because the parents have no money, because in Australia the government provides money to all those who don’t have an income. It can’t be because there is no food available – there are shops in these communities where the malnourished children live, as well as bush food.

There was a widespread refusal to even think about responsibility. If there were no practical consequences to our failure to talk about responsibility – and strong strategic reasons not to make the responsibility concession to the political right – then this situation could have continued. But there are practical consequences galore! It is simply not possible to see how any social or economic problem can be solved, or opportunity seized, if we don’t first accept responsibility. No progress can be made without filling the gaping deficit.

My view is that the main reason why people have refused (and still refuse) to talk about responsibility is not for strong strategic reasons, but because they actually believe that better health and better education and better housing and better life expectancy and better survival of traditional languages are rights that can be enjoyed if other people – specifically governments, but also the wider society – take the necessary actions to make them materialise. It amounts to this absurdity: my rights depend on you fulfilling your responsibilities to me. Who in world history has ever been saved by anyone in the way we hope whitefellas will save our people?”

Any thoughts about these and / or other principles of dialectical philosophy and how they can or should be applied to the current local or world situation? eg. What is the principal contradiction in the world today?

The marxist theory of crisis

karl marx

Marxist Theory of Overaccumulation and Crisis (1990) by Simon Clarke (21 pages)

The purpose here in writing a brief review is to generate enough interest in Simon Clarke’s essay, so that people will read it. This in turn may lead to reading Clarke’s more comprehensive book, Marx’s Theory of Crisis (1994)

At the start, Clarke somewhat mysteriously refers to orthodox Marxist theories as underconsumptionist. Don’t be put off by this. In section 3 (pp. 6-7) he stresses that overproduction is the Marxist tradition and presents an incisive explanation of the deficiencies of underconsumptionist theories.

Clarke’s goal is to explain that capitalist crisis is necessary, that it can’t be avoided. In this respect efforts to reform capitalism are a waste of time.

Various dodgy theories which have been advanced in the name of Marx are briefly described and critiqued.

The theory of the tendency of the rate of profit to fall is not a sufficient explanation for the cause of crisis. The falling rate of profit may intensify but cannot explain the necessity of crisis. Bad theories lead to bad policies, the idea that crises can be resolved by wage restraint and the transformation of work practices to restore the rate of profit.

So, what is Clarke’s understanding of the Marxist theory of crisis? This:

“The source of crisis lies neither in the ‘anarchy of the market’, nor in the immediate process of production, but in the relation between the two , in the ‘circulation process which is in itself also a process of reproduction’ “ (1)

The tendency of capitalism is to develop the productive forces without limit. However, the ability of the working (and unemployed) population to consume without limit is restricted. This creates the possibility of crisis at a point in between production and consumption.

But underconsumption and overproduction are not opposite sides of the same coin, as claimed by Sweezy.

Production and consumption cannot be neatly separated. They constitute a dialectic, both united and separate at the same time (2). For example, when the capitalist buys means of production and puts them to work that is both consumption and production combined – productive consumption.

Another misconception is to look at consumption as the ultimate goal of capitalist production. The real goal of capitalist production is to produce surplus value. For that to happen products made have to be sold. But that is not a smooth process. The strength of Marx’s analysis is his ability to articulate all the difficulties and contradictions along the way in between the categories of money, means of production, labour power, the production process and the exchange of the new commodities produced.

From experience of recessions and depressions it is obvious that not everything produced is automatically sold. Say’s law which states that production creates its own consumption is wrong. The market does not magically solve this issue.

Moreover, capitalists produce both means of production (Department 1) and consumer goods (Department 2). Underconsumptionist theories focus just on Department 2 consumer goods, the essential requirements to keep the working class (and capitalist class) ticking over. So, the unconsumptionist analysis is one sided in this respect as well.

However, unevenness and disproportionality in production and circulation can’t be avoided due to the tendency of capitalist production to expand without limit. A theory of inevitable disproportionality has far more credibility than a theory of inevitable generalised underconsumption.

It is necessary to study Marx’s circulation and reproduction schemes (Volume 2) to achieve more clarity about this.

Do crises arise from the ignorance of capitalists? Could a more centralised co-ordination of capitalist production avoid crises?

Before answering these questions we need to ask another: Why is there overproduction?

Capitalists may lust for more profit but why doesn’t the more rational, smarter capitalist anticipate the results of overproduction and gracefully withdraw to a more in demand productive sector, thus preventing disproportionality between sectors arising?

Various theories have been developed to explain the alleged general irrationality of capitalists. Unwarranted optimism. Erroneous expectations. The lure of creative innovation. Unwarranted credit expansion by irresponsible governments. Monopoly distortion of the market. Immobility of fixed capital. These theories are critiqued by Clarke.

Clarke demystifies the market by outlining the many contradictions that lie beneath its surface.

Competition for raw materials, means of production, labour power, credit etc. confront the capitalist as a barrier to further expansion and realisation of surplus value– a barrier which each capitalist must strive to overcome. The successful capitalist will develop the productive forces without regard to the limits of the market. Ultimately the only way to realise more surplus value is to produce more commodities as economically as possible and throw them onto the market. Capitalism is a dynamic, expansive system by its nature.

Competition inevitably leads to an uneven development of the forces of production as capitalists struggle for a competitive advantage. It is inevitable that this will lead to imbalances between production and consumption. Clarke traces out this immanent tendency of capitalism in more detail.

Eventually capitalism hits a wall. A crisis of accumulation means that capital exists which cannot be realised, cannot be used. This capital can be in the form of money which has no where to go, means of production which are not utilised (over capacity) or unsold commodities. The crisis can only be resolved by the destruction of this unrealised capital and then starting over again.

What is the role of credit in the capitalist system? As stated above competition for raw materials, means of production, labour power, credit etc. confront the capitalist as a barrier to further expansion and realisation of surplus value. To break through this barrier the capitalist needs money and may not have enough. Credit fills this gap for the capitalist.

At the other end of the chain the customer needs money to buy commodities. Once again credit can make up for a short fall here.

Can credit be used to overcome the tendency of capitalism to crisis?

Credit can delay and smooth the process but does not resolve the underlying contradictions. During a boom optimism prevails and credit is cheap and easily available. This stimulates further overaccumulation, uneven development and disproportionalities. If credit continues to expand in this context then this will lead to inflation.

Sooner or later, the boom turns to bust, a destructive downward spiral, where “the over accumulation of capital suddenly appears in the form of a mass of worthless debt and an enormous overproduction of commodities”, etc

This cycle of overaccumulation and crisis has been going on for over two hundred years.

Mainstream economics explains it as a monetary phenomena whose ultimate causes are psychological or political. But despite various theories the crises still continue. To explain them we need to return to Marx who looked below the surface to how capitalism really functions.

Recurring economic crisis is not just economic crisis. If it cannot be avoided then it is social crisis. It has to be dealt with.

The purpose of this summary is to encourage further critical study of authors such as Simon Clarke who do appear to have understood the Marxist theory of crisis amongst the swirl and confusion of many other interpretations.
(1) Clarke provides reference to three sources in Marx’s original writings to support the claim that his interpretation is the real deal. Here are the links:
Capital volume 3, pp. 351-2, Penguin, 1981 beginning with “Given the necessary means of production” in the online translation

Grundrisse, pp. 410-11, Penguin, 1973. beginning with “But from the fact”

Theories of Surplus Value, Volume 2, p. 513-517, Progress Publishers, 1968, 1971, beginning with “On the Forms of Crisis”

In section 2: THE GENERAL RELATION OF PRODUCTION TO DISTRIBUTION, EXCHANGE, CONSUMPTION, Marx presents a mind blowing account of the interrelations between these categories, which anticipates his more detailed treatment in Volume 2.

Thou Shalt Not Build Dams – Ever!

The Queensland floods have caused tragic loss of life, vast damage to infrastructure and will cost several billions of dollars. They are among the worst floods in Australia’s twentieth century history. Similar devastation occured in 1918, 1954 and 1974. I know a couple of farmers ‘up north’ and one tells me that after a bad drought comes a bad flood. He adds that this is followed by a couple of good years with ‘bumper crops’. He might be right – I don’t know. At least he is offering a testable hypothesis.

What I do know, though, is that the floods will generate a much-needed public discusion, and hopefully a debate, about the role of dams in flood mitigation. No new dams of significant size have been built in Australia for about three decades. During the recent long drought, the ‘dam’ question arose again but the response from experts and governments was along the lines of ‘Why build a dam if the climate has permanently changed in a way that means there will be less rain in future?’.

Opposition to dams has been a key success in the development of the Green movement and its party since the early 1980s. But to use the term “opposition” understates the situation: it is really ‘demonization’ of dams. In the Green quasi-religion, dams are evil, akin to a Satanic force. Thus, there must NEVER be any new major dams built. Not ever. The Green policy is expressed at their website as a principle: “There should be no new large-scale dams on Australian rivers”. 

Had the Greens been as influential in the second half of the 1970s as they have been since the mid 1980s, it is unlikely that the Wivenhoe Dam, on the Brisbane River, 80 kms from Brisbane, would have been constructed (after years of planning and building, it was opened in 1984). The Wivenhoe was designed, following massive floods in 1974 (on current indications, worse than the present Brisbane flooding), with a flood mitigation function alongside the usual water supply role. Like all dams, it is an example of human beings changing the natural world, by unnatural means, into something very useful and necessary to us in terms of our needs, standard of living and future progress.

During the terrible Australian drought, the Queensland Government moved to build a new dam on the Mary River, the Traveston Crossing Dam. It was seen as necessary to providing reliable water supply to Brisbane. Opposition to it, spear-headed by green activists, was successful and the Traveston dam was never built. Given that the drought had been so severe and gone on for so long, back then the argument that there might not be enough rainfall to justify such a large dam carried some weight to many people. But there were also those who argued convincingly for it and it was only halted because of a decision by the Federal Minister for the Environment in 2009 who was worried about the loss of endangered species (a lungfish, a local turtle and a local cod). In the recent floods, the Mary River peaked (at the town of Gympie) at over 19 meteres. What would have been the flood mitigation impact had the Traveston Corssing Dam been in place?   

To the Green mentality and ethos, changing Nature is destroying Nature, dams are an assault on the ‘delicate balance’ in Nature, an example of human arrogance going ‘too far’. In this regard, the Green mentality and ethos are quasi-religious. The late Michael Crichton put it neatly in a speech to the Commonwealth Club in San Francisco in 2003 when he talked of the “remapping of traditional Judeo-Christian beliefs and myths’. He said: 

There’s an initial Eden, a paradise, a state of grace and unity with nature, there’s a fall from grace into a state of pollution as a result of eating from the tree of knowledge, and as a result of our actions there is a judgment day coming for us all. We are all energy sinners, doomed to die, unless we seek salvation, which is now called sustainability. Sustainability is salvation in the church of the environment. Just as organic food is its communion, that pesticide-free wafer that the right people with the right beliefs, imbibe. Eden, the fall of man, the loss of grace, the coming doomsday—these are deeply held mythic structures. They are profoundly conservative beliefs.

(Full text: )

It’s good that he identified them as ‘profoundly conservative beliefs’. They are very reactionary beliefs.

As has been pointed out many times at this site, it is indicative of our strange times that opposition to dams, as a matter of principle, can be seen as left-wing. What is the traditional practice of left-wing parties in power on this question? What is the left-wing theoretical foundation for a policy on dams?

In practice, revolutionary left-wing parties in power – such as the communists in Russia/Soviet Union in the 1920s and 1930s and China in the 1950s and 1960s – were gung-ho in the building of dams. They did so because making a revolution is about changing things for the better, raising the standards of living and opportunities for liberation from wage slavery. To borrow from Karl Marx, it’s about ‘unleashing the productive forces’ – not forcing them into a sustainable relationship with Nature. It’s about an attitude based on “You ain’t seen nothin’ yet!” – not ‘tread gently – Nature’s resources are finite’. But this is ‘red’ politics, not green. The Chinese revolutionary Mao Zedong was so into dams that in 1956 he wrote a poem about his dream for the Yangtze:

“Great plans are afoot:
  A bridge will fly to span the north and south,
  Turning a deep chasm into a thoroughfare,
  Walls of stone will stand upstream to the west
  To hold back Wushan’s clouds and rain
  Till a smooth lake rises in the narrow gorges
  The mountain goddess if she is still there
  Will marvel at a world so changed”. 

In chapter 1 of The Communist Manifesto, Karl Marx expressed his enthusiasm for the revolutionary consequences of the rise of the new bourgeoisie in transforming Nature and extending human horizons. He said:

It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades. 

It is unlikely that he would not have been as awe-inspired by the wonders of large-scale dam construction and the range of benefits on such a vast scale arising from dams: the capture and storage of safe and reliable water supply, generation of hydro-electricity, irrigation, flood mitigation and recreational uses (all on a scale unimaginable in Marx’s time).

The Wivenhoe Dam on the Brisbane River worked effectively in mitigating bad floods around Brisbane in 1999 but, alas, despite its 1.4 million megalitre flood mitigation capacity (on top of its water supply capacity of 1.1 million megalitres) it could not stop the extensive damage that occured during the current floods. And to return to the opening point of this article, there needs to be debate about all this. To what extent did the Wivenhoe mitigate the flooding of Brisbane? How much worse would it have been without that mitigation capacity?

There is good stuff on this at Catallaxy 

I know that it will be argued that dams are ‘so 1950s’ but that is not an effective argument unless the proponent can offer something new and better. And, no, the state imposing compulsory water storage tanks in homes is not something better. I live in a trendy inner city suburb and a few of my neighbours have multiple storage tanks in their gardens, a reflection of their susceptibility to climate change alarmism. (They no longer have that glow of self-righteousness about them but will no doubt keep the tanks in place).

An area that interests me greatly is geoengineering and its possible roles in controlling rainfall. I have no expertise in it or in hydrology. But I do know about politics and the politics that declares, as a matter of principle, that there must be no new large dams is a dogmatic, conservative and reactionary politics. It is highly unlikely that adherents of such green politics would support greater funding for research into geoengineering solutions – indeed, geoengineering is abhorrent to them – let alone new dams with enhanced flood mitigation capacities, as appropriate in flood prone regions.

It always strikes me, when these issues arise, how backward the social system of capitalism really is. Human lives and billions of dollars are lost yet only a pittance is invested into research and development into geoengineering, let alone dams, and even that is contested by the reactionaries.   

Resources for studying “Capital” with emphasis on Value theory

There are many schools of economic thought. I have listed more than twenty (at the bottom). It’s important of course to have some real understanding of these various schools. However, Marx stands alone for his work on understanding the fundamentals of how capitalism works, its inner machinations. His work was a critique of the political economy that came before him and in its fundamentals delves far deeper than the economics that has preceded him. Although the person is long dead his ideas are still very relevant and in need of an update.

It is generally acknowledged that the most difficult part of Marx is Chapter One of Capital, titled Commodities. It has taken me quite some time to get my head around it. I believe that most people would require a guide or guides to understand it. It also requires a commitment to slow, deep thinking. I’m listing here some resources I have found useful with some short notes as to which areas they cover.

Marx, Karl. A Contribution to the Critique of Political Economy
This was published in 1859 by Marx before he wrote Capital. So it provides a briefer overview of his argument. It is useful to compare Contribution with Capital as well as the differences between first and second editions of Capital. There is considerable redrafting and evolution in Marx’s thinking. Contribution also contains a section on Method, which is famously missing in Capital.

Marx, Karl. Capital Volume One, Chapter one: Commodities (first published in German, 1867)
There are 4 sections to Chapter One
Section 1: The Two Factors of a Commodity: Use-Value and Value (the Substance of Value and the Magnitude of Value)
Section 2. The Two-fold Character of the Labour Embodied in Commodities
Section 3. The Form of Value or Exchange-Value
Section 4. The Fetishism of Commodities and the Secret thereof
This must be one of the most contested, interpreted and reinterpreted texts in the history of texts. We can’t expect to just read and understand this text. It does need to be gone over very carefully and of course a good conversation along the way helps with learning, a lot.

Fine, Ben and Alfredo Saad-Filho. Marx’s Capital (2004)
This is a relatively short (180 pages) introductory account of the central issues of Marx’s political economy and its brevity might appeal as a way to start.

Harvey, David. The Limits to Capital. (2006)
David Harvey has written lots of books including volumes devoted more closely to reading Capital. He also has a series of online videos about Volume One. This book by Harvey is the one I have been reading. He is a very good writer and interpreter overall of Marx IMO (although I am puzzled by his sometimes advocacy of a zero growth future) and provides many footnotes and references for further study.

Rubin, Isaak Essays on Marx’s Theory of Value (written circa 1928)
I have found this one extremely useful for understanding the form of value, as distinct from the magnitude of value, eg. Chapter 12. Content and Form of Value. The form of value has been missed or neglected by some interpreters.

Fine, Ben and Milonakis, Dimitris. From Political Economy to Economics: Method, the social and the historical in the evolution of economic theory (2009)
This contains some brief but very good sections explaining value theory. They are situated in a broader overview of the whole history of the economic methods of different schools, which helps to fill a gap left by Marx. It is quite an amazing feat really to compare the methodology of the major schools of economic thought in one volume.

Saad-Filho, Alfredo. The Value of Marx: Political Economy for Contemporary Capitalism.
Currently this is one of my favourite interpretations of Marx’s value theory and luckily it is online. I really like the first chapter which taught me new things about materialist dialectics and the subsequent chapters do a good job of critically explaining different interpretations of value theory including some of the more recent ones. I recommend reading the footnotes too, they are very informative.

Rosdolsky, Roman. The Making of Marx’s Capital (first published circa 1968)
Rosdolsky gained some insights into controversies about Marx’s value theory by reading work by Marx published long after his death, such as Grundrissse. Rosdolsky is not a great writer but he knows his Marx and he sets the record straight in a number of instances.

Quite a few of these resources are available on line at the Marxist Archive. Personally I find it best to buy them or print off the chapters I want to study, since the material is too dense to assimilate just by reading. My own study style is to make marginal notes and also to compile separate notes as I go along. If anyone can just read Marx and pick him up like chewing minties then good luck, i would like to meet you.

Of course all of this reading is  rather daunting. It’s a grunt. But it would be great to grow a community who understand and discuss these ideas and their application to the current economic crisis. Now then, we can’t really apply Marx’s ideas to the current economic crisis if we don’t understand them, can we?

List of Economic schools of thought:

  • mercantilism
  • physiocrats
  • classical
  • marx
  • neo classical (marginal theory of value)
  • keynesian
  • neo classical synthesis or neo keynesian or neo classical keynesian
  • welfare economics
  • new keynesian
  • post keynesian
  • chartalist
  • austrian
  • monetarist
  • chicago school aka neo liberalism
  • neo ricardo – sraffa
  • complexity theory – econophysics
  • complexity economics
  • dynamic stochastic general equilibrium
  • institutionalist or evolutionary or innovation economics
  • behavioural economics
  • public choice theory
  • rational choice theory
  • social choice theory
  • information economics
  • ecological economics
  • thermo economics
  • energy economics
  • neuro economics
  • experimental economics
  • first chicago school
  • mutualist political economy
  • game theory
  • agent based computational economics
  • AI economics
  • Dynamic economics